Friday, October 17, 2008

Shocking News from Britain

Shocking because someone in the British government said something that makes sense, which, these days, is extremely rare.

Strict limits are to be imposed on immigration amid fears that unemployment rises in the economic downturn will fuel racial tension.

Phil Woolas, in his first interview since taking over as Immigration Minister, said that he wanted to see a dramatic reduction in the number of migrants coming to Britain.

In what many will see as extraordinary remarks for a Labour minister, he told The Times that the economic backdrop changed everything. “If people are being made unemployed, the question of immigration becomes extremely thorny . . . It’s been too easy to get into this country in the past and it’s going to get harder,” he said.

Ministers intended to introduce changes to allow it to set a limit on migration, he said. “This Government isn’t going to allow the population to go up to 70 million. There has to be a balance between the number of people coming in and the number of people leaving.”

With the British economy particularly hard hit by the current global financial meltdown, reducing immigration (both legal and illegal) is simply a common sense move. Adding more workers when there is a shortage of jobs in lunacy. Of course, given that the UK is a welfare state, immigration doesn't neccessarily translate to having more workers, not matter what the economic conditions.

Woolas's comments caused shock across the governing (barely) Labor establishment.

Until now the Government has shied away from curbing levels of immigration, which have reached record levels under Labour.

Keith Vaz, the chairman of the Commons Home Affairs Select Committee, was shocked by the comments. “I would be astonished at a Labour immigration minister in effect changing the policy,” he said. “His predecessor and the Home Secretary have made it very clear they do not support a quota.”

The high levels of immigration to the UK, especially from non-Western places like Pakistan have added nothing to British culture (except for a new wave of terrorists). Indeed, it has help fragment the British people and errode British culture in a way that no foreign army ever has. Labor - the British left - has been at the forefront of working to demolish the idea of Britain as a distinct culture and the English, Welsh and Scots as distinct peoples. For a Labor minister to call for immigration restriction - even in the face of economic calamity is quite a surprising u-turn.

With immigration still a big issue of public concern, Labour is under pressure to toughen its approach after the Tories revealed plans for annual limits on numbers entering the country.

The Tories (the conservative party) has been gaining steadily against the hapless Labor party for some time and will probably wrest control of the government from Labor in the next general election. So Woolas's proposals probably represent a desperate acknowledgement by Labor of the UK public's growing anger at their open door immigration policies.

Still, even if Woolas was to implement his ideas, it would not be enough to undo the damage that has already been done.

The latest figures estimate that net migration – the gap between those entering and those leaving the country – will run at more than 200,000 a year until 2012. About 70 per cent of population growth over the next 25 years is expected to be a result of migration.

This is disaster for Britain. Immigration continues to undermine national cohesion, dillute British culture and overwhelm the native ethnic demographic of the UK. The British people never voted to authorize the invasion of their nation - that was an idea foisted upon them by their elites.

Labor's dedication to open door immigration and the culturally devastating ideologies of multiculturalism and political correctness are so deep that Woolas's statements must be treated with some skepticism. If Labor were to endorse his ideas, it would mark a striking break with decades of policy. The advocates of that intellectual poision have been gleefully watching Britain die for many years under the immigration tidal wave they unleashed. They will not be pleased with Woolas's comments, and will likely agitate against him. They would rather see Labor defeated than abandon their dream of wiping out British (and later Western) culture. It is more likely that Woolas will quickly find himself denounced as a racist and a fascist, among other things, and forced from his position.

On the other hand, perhaps the converging pressures of economic crisis and impending electoral disaster have forced a hiccup of common sense from Labor. If so, it would be the first such hiccup in years.

South Africa Continues to Fall

The overthrow of Apartheid was hailed as a great moment in human history. In early 1990's, hoards of Western journalists ran up enormous expense accounts traveling to Africa to pen accolades to Nelson Mandela and the African National Congress as they took control of the country. In recent years, however, the Western media has generally avoided the subject of South Africa whenever possible. The reason: the country is falling apart.

Over the past ten years, crime has skyrocketed, the economy has soured, ethnic tensions have exploded (mostly between native African peoples) and, in general, South Africa has begun to resemble the rest of the continent - poor, mismanaged and violent.

The resurgence of savagery is just one more marker of the nation's decline.

Machete-wielding gangs in South Africa are mutilating young people to provide body parts for the traditional medicine market, an investigation has found.

The practice has brought terror to parts of South Africa, where it is estimated that at least 300 people are killed each year for the medicine, known as muti.

One victim was Fortune Khumalo, a boy of nine, who was attacked as he relieved himself in bushes.

His attacker sliced off his penis and testicles to sell to a traditional healer in Johannesburg, where body parts can fetch £250 and a human head up to £500, according to the research for Channel 4's Unreported World.

Machetes are really, really popular in Africa these days.

Hawaii Drops Universal Child Healthcare

Earlier this year, the state of Hawaii launched an ambitious program to provide free health care to children whose families did not have health insurance, or had very low incomes. Now, just seven months later, the state is abandoning the program. Why?

"People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don't believe that was the intent of the program."

State officials said Thursday they will stop giving health coverage to the 2,000 children enrolled by Nov. 1, but private partner Hawaii Medical Service Association will pay to extend their coverage through the end of the year without government support.

Did Hawaii's oh-so-clever politicians really not foresee this? Hawaii is a highly taxed state with a cost of living significantly higher than in other states. The taxpayers who were footing the bill for this largesse saw that they were paying twice for child health care - first, for their private insurance, and then again for insurance for everyone else - not surprisingly many decided to cut their losses by dropping their expensive insurance and taking advantage of the free offering from the state. Why not? They were already paying for it with their taxes.

If you provide something valuable for free, people will take it, and they will take more of it than they would if they had to pay for it. That's both basic economics and basic human nature. Politicians never seem to get that.

And they wouldn't have acknowledged that reality in Hawaii either, if circumstances hadn't forced them to do so.

The Republican governor signed Keiki Care into law in 2007, but it and many other government services are facing cuts as the state deals with a projected $900 million general fund shortfall by 2011.

Signed into law by the Republican governor. Does anyone wonder why the GOP is in tatters?

Thursday, October 16, 2008

The Other Shoe Begins to Drop

The financial meltdown that began in the US, and has now spread across the world, originated in the refusal of Americans and the US government to live within their means. The US government's effort to magically increase homeownership - by forcing banks and other lenders to give mortgages to people who had no way of paying for them, and then making Fannie Mae and Freddie Mac buy up those lousy mortgages so the lenders could go back and lend even more - caused the subprime mortgage fiasco that brought down Wall Street, which foolishly leveraged itself on US mortgage assets (which had been a traditionally safe bet). Now the second phase is ripe to begin: credit card defaults.

Since middle class income in the US has been stagnant for quite some time, Americans have been going heavily into high-interest debt in order to finance their buying sprees. Banks and other credit card issuers have been only to happy to let them because they know that most people don't pay off the balances on their credit cards, thus incurring enormous interest payments. With interest rates at around 30 percent on many credit cards, and numerous fees, credit cards have been a cash cow for many lenders. Credit card issuers have flexed their lobbying muscle in Washington to make certain no regulators rained on their party, and rewrote the consumer bankruptcy to their favor. Now that greed it beginning to catch up with them.

Consumers are increasingly unable to pay off their credit cards, forcing banks to hoard cash to protect against future losses and lend to fewer people, according to reports yesterday from several of the nation's largest banks.

These financial disclosures showed a spike in credit card loans going bad, putting further pressure on already-stressed balance sheets. J.P. Morgan Chase said the number of credit card loans in default rose 45 percent in the third quarter from the comparable period a year ago and predicted that default rates would sharply accelerate through 2009, with 7 percent of credit card loans going bad.

"We have to be prepared that it gets a lot worse," J.P. Morgan chief executive Jamie Dimon said about the overall economic outlook.

This was entirely foreseeable. But no one in Washington had an interest in reigning in the credit card issuers. Certainly not the Bush administration, which has borrowed trillions of dollars for its pork projects and wished for the illusion of prosperity to last at least until Dubya was out of office. And certainly not the Democrats, who wouldn't know sound economics it if hit them on the heads.

Now, credit card issuers find themselves caught in a perfect storm, largely of their own making. Unfortunately, the effect will harm the nation as a whole.

The deterioration in consumer credit, the latest downturn to whack Americans after the housing slump and mortgage meltdown, threatens one of the linchpins of the U.S. economy. Over the past 10 years, credit card debt has gone up 75 percent as Americans' real wages and savings rate have stayed flat. That means Americans have been spending beyond their means -- and fueling economic growth with borrowed money.

Now, the housing crash, financial downturn and contracting economy have made it more difficult for Americans to settle their bills, setting off a downward spiral. As people fail to pay off their credit card bills and other loans, banks must put away money to cover expected losses. So banks lend less. Americans who tended to rely on loans to fuel their spending must cut back, readjusting their spending habits to conform with what they earn.

"Given that the savings rate has been minuscule, there's no reserves in the tank for the consumer to tap his savings to support his spending," said Scott Valentin, a financial services analyst at Arlington investment bank Friedman Billings Ramsey. But consumers have been driving about two-thirds of the U.S. economy.

This means additional shocks to the US financial system over the coming year as bad credit card debt begins to weigh heavily against already shaky balance sheets. The credit crunch, in short, will deepen.

"There's a complete freeze of lending to low-income, high-risk borrowers as banks try to stabilize their balance sheet. They're not going after anyone with moderately shaky credit. They're even being cautious with people who have great credit," said Gregory Larkin, a senior analyst with Innovest.

Credit card debt is not the only area showing weakness. Defaults on auto loans are also rising fast. "Even somebody with great credit is going to have an extremely difficult time getting a loan if they don't have a down payment," said Greg McBride, senior financial analyst at

Of course, this is exactly how capitalism is supposed to work. When lenders behave foolishly, the market punishes them. Federal regulation was supposed to soften the market's harsher judgments by restraining the bad behavior in the first place. But regulation only works when the government actually does its job, and has little chance of working when the government is dominated by second-rate people as it is now. When the government's guiding ideology is deficit financed spending sprees, you can't expect it, or the electorate to behave reasonably.

And in this case, the fork-tongued politicians and shiftless bureaucrats of Washington aren't the only culprits...

In reporting sharply lower profits for his company earlier this month, Bank of America chief executive Kenneth Lewis called lending conditions "a damn disaster." Lewis added, "We are making every good loan we can find," but "it's not going to be pretty for awhile."

This is the CEO whose company has been issuing credit cards to illegal aliens. Gee, Mr. Lewis, exactly who created this "damn disaster" in the first place?

According to Forbes, Mr. Lewis has received $165 million in compensation over the last five years as Bank of America's CEO. That is the state of American finance.

Tuesday, October 14, 2008

Quote of the Day

President George W. Bush, explaining the federal government's plan to partially nationalize American banks in an attempt to reverse a credit crisis that the federal government itself largely created:

"The government's role will be limited and temporary," Bush pledged. "These measures are not intended to take over the free market but to preserve it."

Isn't it quaint that American leaders still feel it necessary to maintain a pretense about their power grabs, and lie so openly to the people?

A Consequence of the Crash

Pat Buchanan points out the simple fact that with the U.S. deficit about to reach historic and astonishing levels, the financial system in shambles, and a recession on the horizon, the neo-conservative dream of Empire is about to bite the dust.

We no longer live in Eisenhower or Reagan's America. Even the post-Cold War world of George H. W. Bush, where America was a global hegemon, is history. In both relative and real terms, the U.S.A. is a diminished power.

Where Ike spent 9 percent of GDP on defense, Reagan 6 percent, we spend 4 percent. Yet we have two wars bleeding us and many more nations to defend, with commitments in the Baltic, Eastern Europe, and the Balkans we did not have in the Cold War. As U.S. weapons systems are many times more expensive today, we have fewer strategic aircraft and Navy ships than Ike or Reagan commanded. Our active-duty Army and Marine Corps consist of 700,000 troops, 15 percent women, and a far higher percentage of them support rather than combat troops.

With so few legions, we cannot police the world, and we cannot afford more. Yet, we have a host of newly hostile nations we did not have in 1989.

Not only does US no longer possess Eisenhower's or Reagan's military, it no longer possesses the same population of those years. The American people of 2008 are, demographically, not the same American people that fought WWII or broke the back of the USSR. For the last 40 years, the US government deliberately imported a new people, mostly from backward, third world nations, whose denizens had never accomplished anything of merit. Now America is saddled with their unproductive progeny even as its own productive population declines markedly. The illusion of easy credit and fiat money made it possible for Washington to distract the electorate from what was going on for decades, but now the bills are so large, and coming in so fast, they cannot be ignored.

Still, it's not a complete loss for the US. After all, why are we defending Europe and South Korea, which have long had the financial wherewithal - if not the desire - to defend themselves? Why drain the US treasury to stick our noses in other peoples' fights?

With U.S. markets crashing and wealth vanishing, what are we doing with 750 bases and troops in over 100 countries?

With a recession of unknown depth and duration looming, why keep borrowing billions from rich Arabs to defend rich Europeans, or billions from China and Japan to hand out in Millennium Challenge Grants to Tanzania and Burkina Faso?

America needs a bottom-up review of all strategic commitments dating to a Cold War now over for 20 years.

Is it essential to keep 30,000 troops in a South Korea with twice the population and 40 times the wealth of the North? Why are McCain and Obama offering NATO memberships, i.e., war guarantees against Russia, to a Georgia run by a hothead like Mikheil Saakashvili, and a Ukraine, millions of whose people prefer their kinship to Russia to an alliance with us?

We must put "country first," says John McCain.

Right you are, Senator. Time to look out for America first.

Unfortunately, while paring back America's overseas commitments would be an undoubted good, regardless of the current financial climate, there is no evidence that the money saved would be used to advanced financial stability or fiscal discipline at home. Any money saved from drawing down our overseas commitments is likely to be used for "community organizing" to assist the perennially poor, sick or criminal at home. Different toilet, same result.

Monday, October 13, 2008

Here's a Big Surprise...

The UK Telegraph reports that under the oh-so-efficient socialism of Hugo Chavez, Venezuela's oil output has fallen by almost 25%. Making matters worse for Venezuela, Chavez's efforts to assist other struggling socialist states have placed the national economy at the hands of the one nation Chavez misses no opportunity to antagonize.

To win allies and forge an anti-American front, Mr Chavez sells oil to friendly countries at low prices. Ironically, the only big customer buying Venezuelan oil at the full market price is the United States, which the president routinely denounces as the "Empire".

"As production falls, the sales to the US become more important," said Pietro Donatello, an oil analyst from Latin Petroleum in the capital, Caracas. "Only the US is paying the full amount for Venezuelan oil and in cash, the rest are in some kind of barter agreements."

The state oil company, PDVSA, produced 3.2 million barrels per day in 1998, the year before Mr Chavez won the presidency. After a decade of rising corruption and inefficiency, daily output has now fallen to 2.4 million barrels, according to OPEC figures. About half of this oil is now delivered at a discount to Mr Chavez's friends around Latin America. The 18 nations in his "Petrocaribe" club, founded in 2005, pay Venezuela only 30 per cent of the market price within 90 days, with rest in instalments spread over 25 years.

The other half - 1.2 million barrels per day - goes to America, Venezuela's only genuinely paying customer.

Of course, one of the reasons PDVSA finds itself unable to reap the benefits of soaring oil prices on the world market is that Chavez insists on running the company as a welfare agency (as all socialists do with state-run enterprises).

Meanwhile, Mr Chavez has given PDVSA countless new tasks. "The new PDVSA is central to the social battle for the advance of our country," said Rafael Ramirez, the company's president and the minister for petroleum. "We have worked to convert PDVSA into a key element for the social battle."

The company now grows food after Mr Chavez's price controls emptied supermarket shelves of products like milk and eggs. Another branch produces furniture and domestic appliances in an effort to stem the flow of imports. What PDVSA seems unable to do is produce more oil.

Other problems abound, including the failure of the Chavez regime to properly invest in new infrastructure and equipment (but how could he, since he spends of much Venezuelan money aiding his socialist cronies abroad). With oil prices falling sharply, Chavez can no longer hide PDVSA's problems behind inflated petroleum prices, and the shaky house of cards one which he has built his socialist revolution is beginning to teeter.

All this means that Venezuela has missed much of the benefit from the oil boom and, now that prices are falling, Mr Chavez faces huge financial problems. Nobody is sure at what point his government would be unable to pay its bills, but most sources consulted believe this would probably happen if oil falls to $80 a barrel. Yesterday, oil was trading at $79.80.

Once that happens, Venezuela is likely to become a very nasty place.